VZCZCXRO6646
RR RUEHROV
DE RUEHAE #0224 1950928
ZNR UUUUU ZZH
R 140928Z JUL 09
FM AMEMBASSY ASMARA
TO RUEHC/SECSTATE WASHDC 0365
INFO RUCNIAD/IGAD COLLECTIVE
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RUEPADJ/CJTF-HOA J2X CAMP LEMONIER DJ
RUEKDIA/DIA WASHDC
RUMICEA/JICCENT MACDILL AFB FL
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RHRMDAB/COMUSNAVCENT
RHMFISS/HQ USAFRICOM STUTTGART GE

UNCLAS ASMARA 000224 
 
SENSITIVE 
SIPDIS 
 
LONDON AND PARIS FOR AFRICA WATCHERS 
DEPT FOR AF/E AND EEB/CIP/BA 
 
E.O. 12958:  N/A 
TAGS: EMIN ECON PGOV ER
SUBJECT: MINING UPDATE: TAKEOVERS AND NEWCOMERS 
 
REF: (A) ASMARA 173; (B) ASMARA 168; (C) ASMARA 095 
 
¶1. (SBU) SUMMARY: The mining and exploration sector is one of the 
only areas of forward momentum in Eritrea.  New entrant companies 
continue to sign new exploration contracts and well-established Sanu 
Resources plans to merge with a larger Canadian entity. 
Collectively, the companies, new and old, agree that the 
mining/exploration sector is an area in which the government 
actively seeks to make its partners happy.  End Summary. 
 
SANU RESOURCES MERGER 
--------------------- 
 
¶2. (SBU) Sanu Resources, one of the four major exploration companies 
in Eritrea, announced it will merge with Canadian Gold Hunter (CGH). 
 CGH is an exploration company with operations in Canada, Mexico, 
and throughout Latin America.  Unlike the Chalice/Sub-Sahara 
acquisition (Ref A), the Sanu/CGH venture will allow Sanu Resources 
to maintain its holdings in Africa rather than handing them over to 
CGH.  The Sanu/CGH consolidation will give a much-needed boost to 
investor confidence, according to Sanu's Country Manager.  Since the 
announcement, Sanu's stock price rose 5.2% and CGH's by 3.9%. 
 
¶3. (SBU) Sanu Resources's major holding is the Hambok deposit in 
Eritrea, nine miles south of the famed Bisha mining strip.   The 
deposit is worth over $200 million, according to Sanu, and is ready 
to be sold to interested mining companies.  Sanu expects to acquire 
several more exploration licenses in Eritrea near the Red Sea, and 
particularly hopes to gain a license for potash. 
 
EXPLORATION NEWCOMERS 
--------------------- 
 
¶4. (SBU) Andiamo Exploration Ltd (a British registered company) is 
one of the new companies recently awarded exploration licenses by 
(Ref B). Andiamo holds copper, gold, and zinc exploration rights in 
Haycota, 31 miles east of the border city of Tessenei.  It is the 
only privately held company to enter the mineral exploration fray in 
Eritrea.  Because the company is privately owned it has been less 
concerned with stock market declines and has relied mostly on 
adventurous private investors, according to one of Andiamo's owners. 
 Although Andiamo is the third iteration of the original company (it 
was previously the Eritrean Minerals Corporation and originally the 
Gold Corporation of Africa), Andiamo is confident it will continue 
to attract private capital. 
 
NEW MINISTER, MORE COOPERATION 
------------------------------ 
 
¶5. (SBU) One of Mines and Energy Minister Ahmed Haj Ali's (ref C) 
first acts was to increase the validity of exploration licenses from 
three years to five years.  The exploration and mining sector in 
Eritrea is a mutually beneficial arrangement, according to 
representatives from both Andiamo and Sanu.  In exchange for 
preferential treatment such as duty-free imports of equipment and 
same-day travel permits, the companies deposit millions of dollars 
into bank accounts in Eritrea but pay out most of their expenses in 
nakfa.  Sanu Resources, for example, spends between two and three 
million USD each year in Eritrea.  Andiamo's co-owner, an Eritrean 
ex-fighter, expressed hope that the lessons learned from the 
relationship between the Ministry of Mines and Energy and 
exploration companies "translate to other ministries." 
MCMULLEN